FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 09 September 2016

Have You Considered These Two Trading Tools?

by Sam Seiden, Online Trading Academy

Article of the Week form Online Trading Academy

As I have mentioned many times, at the core of any successful trading and investing strategy is an "edge". Few traders and investors ever attain the significant market edge they desire and there is a simple reason for this.

Most new market speculators begin their quest for edge building information and education on the internet. They naturally are drawn to look for information and trading tools on websites with the best marketing and popular authors and so on.

The problem with learning how to properly trade and invest with the needed edge from all this is that everyone else is reading the material. Your competition is learning the same strategies you are. They are learning to buy and sell exactly where you are learning to buy and sell and therein lies the trap. Simply put, if you are processing market and strategy information the same as others (your competition), you can't possibly have an edge. For this reason, I typically focus my articles not on conventional trading, technical analysis and market information, but instead on edge building reality based concepts that you won't find on the internet. In today's piece, I will cover two of the many simple trading tools that may help you in your quest for that needed edge when speculating in markets.


Looking back at recent prior data in any market on a price chart, it's easy to see what the current trend is. Most of you are very familiar with the conventional concept of higher highs to identify up trends and lower lows to identify downtrends. I strongly disagree with this conventional way of assessing trends. It is a lagging school of thought that typically leads to high risk, low reward trading and investing. Instead, I choose to use very mechanical "real time trend analysis" as this offers a huge edge; but this is a topic for another day.

One of the little trading tools I can share today has to do with assessing the strength of a trend. It is important to assess how healthy the current trend is and when and where it may end. While supply and demand levels are the strongest way to determine this, there is another way... One way to do this is to measure the distance between the lows of the pivots during the uptrend. Notice the uptrend in the chart below, the distance between the pullbacks (pivot lows) is decreasing as the trend moves higher. The logic behind this is that a strong trending market does not pullback often. If it does, it is not a strong trending market any longer. Keeping with our constant supply and demand theme, remember that a trend on any time frame is really a supply and demand imbalance moving back into balance. This is a larger time frame chart but the assessment can be done in any market, and any time frame.


Uptrend: When the distance between the pivot lows is decreasing, this suggests price is nearing a supply level, the trend is becoming weak, risk to buy is increasing and profit potential for buying opportunities is decreasing. The uptrend is likely almost over.

Downtrend: When the distance between the pivot highs is decreasing, this suggests price is nearing a demand level, the trend is becoming weak, risk to sell short is increasing, and profit potential for shorting opportunities is decreasing. The downtrend is likely almost over.

Learn to use stock market trends to plan your trades


Volume, in my opinion, is one of the most misunderstood trading tools when used for assessing trading and investing opportunities. While there are many misunderstandings with volume, I will focus on only one today. As most of the books say, "Look for above average volume turning points." In other words, most books on trading suggest that a major turn in price should always be accompanied by high or climactic volume. My short comment: don't believe everything you read. If you think the simple logic through, and focus on the real concepts of supply and demand, you will find that the exact opposite is actually true. Your most significant turns in price are often accompanied by low volume. Price movement in any and all markets is simply a function of an ongoing supply and demand relationship. Low risk, high reward trading opportunity exists at price levels where this simple and straight forward relationship is out of balance.


The most significant turns in price will happen at price levels where supply and demand are "most" out of balance. The more out of balance supply and demand is at a given price level, the less time price spends at that level. The less time price spends at a level, the fewer the transactions (trades) at that price level. The fewer transactions, the lower the volume. So, the larger the supply and demand imbalance at a given price level, typically, the lower the volume.

As you can see in the example below, at the turn in price there is actually very low volume and this is because supply and demand are soooooo out of balance. Again, don't take my word for it, put your conventional technical analysis book down and think the simple logic through on your own. Then, go back and look at charts and you will see this is the case. At these key turning points, you have the highest "potential volume" but you don't get that actual volume because most of it's on one side of the market.

How to use volume to identify buying opportunities in the stock market.

Supply Demand Grid S&P Trade: Aug 29, 2016

Learn to read a stock chart and use trend and volume to identify trading opportunities.

Instead of reading all the trading books and learning to buy and sell in markets when everyone else buys and sells (no edge)... Instead of acting on the advice of others who likely get paid from advice, not from trading... Pay attention to what is happening in front of your eyes. Pay attention to what is happening around you. Pay attention to all the simple realities that others never see. Changing your ways and getting what you want out of life requires two difficult tasks for the individual. First, you must think like you have never thought. This will lead to the second thing; doing what you have never done. Isn't life too short for you to stay in the comfort zone of conventional thought? Learn to use the trading tools properly. Think in reality based terms and build a life edge that delivers the positive results you desire.

Hope this was helpful. Have a great day.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Investing Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Investing


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
A Short Note on a Connection Between Marginalist Economics and Folk Medicine
Run A High Pressure Economy? Janet Yellen Does Not Understand the Problem
News Blog
Ten Ways To Live A Happier Life According To Animals
21 October 2016: ECRI's WLI Growth Index Again Declines
Advance Estimate 3Q2016 GDP Quarter-over-Quarter Growth at 2.9 Percent.
Rail Week Ending 22 October 2016 Better Than The Previous Week
What Happens After The Islamic State Loses Mosul
Infographic Of The Day: The History Of Women's Ice Hockey In Canada
Early Headlines: Asia Stocks Mixed, Huge Antarctic Marine Park, Can Trump Get To 270?, US Workers Gaining, UK Inflation, France GDP, India Savings Lag And More
Why Amazon Gives So Many Perks To Prime Members
Where Workplace Trust Is Strongest
How A Lack Of Sleep Affects Your Brain - And Personality
How Accurate Are Final US Election Polls
What We Read Today 27 October 2016
A Pony And His Beloved Teddy Bear Reunite After Being Apart For 3 Years
Investing Blog
Technical Thoughts: Looking For The Rebounds
Gold That Pays Dividends
Opinion Blog
Global Debt Investors: The Silence Of The Lambs
A Hard Brexit And Reduced Migration Won't Benefit UK Workers
Precious Metals Blog
Inflation Surging As Platinum Signals Stock Market Decline
Live Markets
28Oct2016 Market Update: Wall Street Tries To Fight Off Bears And Fails, Gold Shoots Higher, US Dollar Falling Like A Rock, Expect Volatility
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

Crowdfunding ....



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved